Europe post-consumer PET bottle prices set to vary across borders

LONDON (ICIS)–Post-consumer polyethylene terephthalate (PET) bottle prices in France and Germany could be moving in opposing directions in January, according to market sources.

The national divisions which split the European recycled polyethylene terephthalate (R-PET) market have become increasingly visible as sentiment in price negotiations in the French and German markets vary, with potentially different outcomes.

The French R-PET market, which generally sees post-consumer PET bottle prices set on a quarterly basis, expects values to fall in January 2016. Post-consumer PET bottles are purchased by recyclers, which then process them in order to make recycled material such as flakes and pellets.  

The good availability of post-consumer PET bottles on the French market and the declining price of virgin PET are driving the price decreases for colourless post-consumer PET bottle prices within the country.

One French recycler said: “Our suppliers have lowered the price of bottles by €20/tonne for colourless. Mixed-coloured prices have not moved.”

This was confirmed by a French post-consumer PET bottle seller which said colourless post-consumer PET bottle availability in France is stronger than that of mixed-coloured post-consumer PET bottles, which explains the difference in price movements between the two.

Although in France, colourless post-consumer PET bottle prices have fallen and mixed-coloured post-consumer PET bottle prices have remained stable, the prices in neighbouring Germany are set to increase, according to some.

Recent post-consumer PET bottle tenders in Germany have led to some prices rising. However, other market participants said they are resisting any price increase in January, as higher prices for post-consumer PET bottles would further squeeze recyclers’ margins at a time when they are fighting against softening virgin PET prices.

Virgin PET competes directly with R-PET in certain applications.

One buyer questioned whether those buyers resisting price increases in January were relying on using existing stock.

Despite several sources accepting price increases in Germany in January, the level of the price rises remains less than certain.

This was summed up by one buyer that stated: “We see some increase, going from €10/tonne to more, with tenders in Belgium and Germany. Increases on all…even up to €30-40/tonne.”

A recycler said: “Bottle prices are going up; that’s a problem… some are trying to increase prices by €50/tonne but I think that is impossible.”

Both post-consumer PET bottle price increases and post-consumer PET bottle price decreases present their own risks to the R-PET market.

If declining post-consumer PET bottle prices in France create a price gap with neighbouring markets, this could generate increased interest from foreign buyers looking to import French post-consumer PET bottles.

A rise in the level of post-consumer PET bottles being exported from France would automatically reduce availability in France and could lead to a return to the situation seen in the first half of 2015, when the French R-PET market faced a shortage of post-consumer PET bottles. 

One German buyer said: “I don’t think that France is self-sufficient in bottles. Bottle prices in France are too low. There are foreigners on the market, even from Asia.”

However, lower post-consumer PET bottle prices come as a welcome relief to recyclers that have seen margins squeezed as they compete with weak virgin PET prices.

On the other hand, increasing post-consumer PET bottle prices at a time when virgin PET prices are low and R-PET flake prices are stable is generating concern on the German R-PET market.

One recycler said: “Flake prices have to go up if bottle prices go up.”

A buyer of R-PET said it was: “Worried about the pricing structure for 2016.”

If higher post-consumer PET bottle prices were to lead to higher R-PET prices at a time when virgin PET prices could fall further, it could negatively impact on the competitiveness of R-PET.

The ICIS post-consumer PET bottle domestic and export price ranges remained stable this week, awaiting further market feedback, as some price discussions have been slow to get underway following the winter holiday season.

The ICIS colourless post-consumer PET bottle price range stands at €280-340/tonne FD (free delivered) NWE (northwest Europe), while the ICIS mixed-coloured post-consumer PET bottle price range was €180-280/tonne FD NWE this week.

Focus article by Luke Milner